Departmental exoneration does not bar criminal prosecution where independent evidence shows a prima facie case of conspiracy and forgery.

Exoneration in departmental proceedings concerning excise duty and VAT evasion did not, by itself, preclude criminal prosecution for conspiracy, cheating, forgery and corruption. The departmental adjudication was limited to the revenue notices and found insufficient evidence for those demands, but it did not determine that the criminal allegations were false. By contrast, the prosecution relied on independent investigation material, including bogus bills, forged transport documents and witness statements, and involved public servants as co-accused. As the adjudicatory standards and scope were different, the charge-sheet disclosed a prima facie case and the charges were not groundless at the threshold.

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Issues: Whether the applicants were entitled to discharge on the ground that they had been exonerated in departmental proceedings concerning excise duty and VAT evasion, and whether the material collected in investigation disclosed a prima facie case for offences of criminal conspiracy, cheating, forgery and corruption.

Analysis: The departmental proceedings were confined to the validity of the excise and VAT demands and resulted in dropping of the notices for want of cogent evidence. Those proceedings did not hold that the allegations were false in criminal law. The criminal prosecution rested on a wider factual foundation, including investigation material, bogus bills, forged transport documents and witness statements, and also involved public servants as co-accused. The scope, purpose and evidentiary standards of adjudication and criminal prosecution were different, and the CBI was not a party to the departmental adjudication. On the material placed before the Special Court, the charge-sheet disclosed a prima facie case and the charges could not be said to be groundless at the threshold.

Conclusion: The plea for discharge was rejected and the revision application failed.

Ratio Decidendi: Exoneration in departmental adjudication on a limited revenue demand does not, by itself, bar criminal prosecution where the investigation discloses independent material making out a prima facie case for cognizable offences.

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